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Why Apple Really Built the iPad Mini

Written by: Chris Ciaccia11/05/12 - 9:06 AM EST

Tickers in this article:
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NEW YORK ( TheStreet) -- Apple (AAPL) has enjoyed dominance in the tablet market like very few companies have, thanks to the iPad. That dominance is waning however, as more Android tablets come on line.

New analysis from research firm IDC revealed that Apple's market share of tablets fell dramatically from the second quarter to the third quarter, as rival Samsung experienced strong growth, nipping at Apple's heels. Samsung saw 325% growth year over year, while Apple experienced 26.1% growth in the market.

Apple's trump card to regain market share is the 7.9-inch iPad Mini , which it announced at the beginning of October. Apple announced Monday it has already sold 3 million iPads since the iPad Mini and fourth-generation iPad were launched, so it appears the device is off to a strong start. This comes despite efforts competitors such as Amazon (AMZN) and Microsoft (MSFT) taking shots at the device.

Apple still owned 50.4% of the tablet market as of the end of the third quarter, though that's down from 59.7% in the year-earlier time frame, and 68% in the second quarter. Overall, the tablet makers shipped 27.8 million during the third quarter, including the 14.1 million Apple sold.

"After a very strong second quarter, Apple saw growth slow as both consumer and commercial (including education) shipments declined, and rumors of a forthcoming iPad Mini began to heat up," said Tom Mainelli, research director of tablets at IDC, in the press release. "We believe a sizeable percentage of consumers interested in buying an Apple tablet sat out the third quarter in anticipation of an announcement about the new iPad Mini. Now that the new Mini, and a fourth-generation full-sized iPad, are both shipping we expect Apple to have a very good quarter. However, we believe the Mini's relatively high $329 starting price leaves plenty of room for Android vendors to build upon the success they achieved in the third quarter."

As more consumers look for increased portability with their tablets, 7-inch models have demonstrated to be a strong segment, with Google's (GOOG) Nexus 7 receiving positive reviews. Google recently announced the Nexus 10, as it tries to compete with the larger 9.7-inch iPad.

Initial impressions of the iPad Mini are overwhelmingly positive, despite the significantly higher price point for its smaller tablet, than its competitors. Yet, CEO Tim Cook was quick to say the iPad Mini is not like the other 7-inch tablets on Apple's earnings call .

"Let me be clear. We would not make one of the 7-inch tablets," Cook said. "We don't think they're good products."

The iPad Mini starts at $329. For instance, the Amazon Kindle Fire HD starts at $199.